Buying an investment property can be an effective way to build long-term wealth, generate rental income, and diversify a real estate portfolio. But financing an investment property is different from financing a primary residence.
Investment property mortgage rates are typically higher, down-payment requirements can be stricter, and lenders may place greater emphasis on credit, cash reserves, debt-to-income ratios, and the property’s expected rental income.
In this guide, we’ll explain investment property mortgage rates in 2026, financing options, down-payment requirements, DSCR loans, conventional investment mortgages, portfolio loans, and how investors can compare financing offers.
Investment Property Mortgage Rates in 2026
Mortgage rates change frequently and the rate available to an investor depends on the property, loan type, credit profile, down payment, loan amount, occupancy, reserves, and lender.
As a market reference, Freddie Mac reported an average 30-year fixed mortgage rate of 7.03% on September 24, 2026 for its conventional mortgage survey. This is a primary-residence benchmark, not a guaranteed investment-property rate.
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Freddie Mac
Investment-property mortgages generally cost more than owner-occupied mortgages because lenders consider rental properties to carry additional risk. Current market comparisons also show that investment-property loans can have higher rates than primary-residence mortgages.
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Bank rate
What Determines Your Investment Property Mortgage Rate?
Lenders may consider:
Credit score
Down payment
Loan-to-value ratio (LTD)
Debt-to-income ratio (DPI)
Cash reserves
Property type
Expected rental income
Number of properties already owned
Loan amount
Investment-property experience
Fixed versus adjustable interest rate
Loan term
Location of the property
A stronger financial profile can help an investor qualify for better financing terms.
How Much Down Payment Do You Need for an Investment Property?
Investment properties generally require a larger down payment than primary residences.
For conventional investment-property mortgages, 15% to 25% down is common depending on the property and lender. Some financing programs require more.
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Bank rate
For example, consider a $400,000 rental property:
Down Payment Cash Down Loan Amount
15% $60,000 $340,000
20% $80,000 $320,000
25% $100,000 $300,000
30% $120,000 $280,000
Remember that the down payment is not the only cash requirement. Buyers may also need money for closing costs, reserves, inspections, appraisal, insurance, taxes, repairs, and other expenses.
Best Investment Property Financing Options
Investors have several financing options depending on their financial situation and investment strategy.
1. Conventional Investment Property Mortgage
A conventional mortgage can be a good choice for investors with strong credit, stable income, and sufficient cash reserves.
Freddie Mac’s investment-property mortgage products support eligible 1- to 4-unit investment properties and can include fixed-rate and certain adjustable-rate mortgages. Additional underwriting and reserve requirements can apply.
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Freddie Mac
Best for: Investors with strong personal finances who want traditional long-term financing.
2. DSCR Loans
A Debt Service Coverage Ratio (DSCR) loan focuses heavily on the property’s ability to generate enough rental income to cover its debt obligations.
This can be attractive for real estate investors who have substantial property income but may not fit traditional income-based underwriting.
DSCR loans are generally non-QM products and can be more expensive than conventional financing.
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NerdWallet
Best for: Rental-property investors who want financing based more heavily on property cash flow.
3. Portfolio Loans
A portfolio loan is generally retained by the lender rather than sold into the secondary mortgage market.
Because the lender keeps the loan, some portfolio lenders may offer more flexible underwriting criteria than standardized conventional programs.
Best for: Investors with unusual properties, multiple properties, or financial circumstances that don’t fit conventional guidelines.
4. Commercial Real Estate Loans
Commercial financing may be appropriate for larger multifamily properties, apartment buildings, retail properties, office buildings, or other commercial real estate.
For larger multifamily properties, financing structures can differ significantly from 1-to-4-unit residential investment mortgages. Fannie Mae’s conventional multifamily financing, for example, is designed for properties with at least five units and has its own underwriting requirements.
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multifamily.fanniemae.com
Best for: Larger multifamily and commercial real estate investments.
5. Fix-and-Flip Financing
Fix-and-flip investors often need short-term financing to purchase and renovate a property before selling it.
These loans may have higher costs than traditional long-term mortgages but can be structured around the investor’s renovation and resale strategy.
Best for: Experienced investors purchasing properties that require significant renovation.
Investment Property Loan vs. Primary Residence Mortgage
One of the biggest differences is risk.
A lender may view a primary residence as less risky because the borrower has a strong incentive to continue making payments on the home they live in.
An investment property, however, depends partly on rental income and market conditions.
Feature Primary Residence Investment Property
Interest rate Usually lower Often higher
Down payment Can be lower Usually higher
Reserves Generally lower Often higher
Underwriting Standard More stringent
Rental income Usually irrelevant May be considered
Property risk Lower for lender Higher for lender
Investment-property financing is therefore usually more expensive than owner-occupied financing.
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Bank rate
How Rental Income Can Affect Qualification
Rental income can be an important factor when financing an investment property.
Lenders may evaluate the property’s expected or documented rental income when determining whether the property can support its mortgage obligations.
However, lenders do not necessarily count 100% of projected rent toward qualifying income. Documentation and underwriting requirements vary by loan program.
Investors should ask lenders exactly how rental income will be calculated before choosing a financing option.
What Is a DSCR Ratio?
The debt service coverage ratio measures whether a property’s income is sufficient to cover its debt obligations.
A simplified formula is:
DSCR = Net Operating Income ÷ Debt Service
For example, if a property produces $36,000 in annual net operating income and annual debt service is $30,000:
DSCR = $36,000 ÷ $30,000 = 1.20
A DSCR above 1.0 means the property’s income exceeds the debt service under this simplified calculation.
Different lenders use different underwriting formulas and requirements, so investors should verify the lender’s exact DSCR methodology.
How Credit Score Affects Investment Property Financing
Credit score can influence both eligibility and pricing.
A stronger credit profile can help an investor qualify for more favorable loan terms, while lower credit can result in higher rates, larger down-payment requirements, or fewer available lenders.
The Consumer Financial Protection Bureau notes that credit score and down payment can materially affect mortgage pricing and borrowing costs.
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Consumer Financial Protection Bureau
Before applying, investors should review their credit reports, reduce unnecessary debt, and avoid taking on new credit obligations when possible.
How Much Cash Reserves Do You Need?
Investment-property lenders may require borrowers to maintain cash reserves after closing.
Reserves provide a financial cushion for expenses such as:
Mortgage payments
Property taxes
Insurance
Vacancies
Repairs
Maintenance
Unexpected expenses
Reserve requirements vary by lender, property type, number of financed properties, and loan program.
Freddie Mac’s investment-property requirements include additional reserve and underwriting considerations for certain borrowers with multiple financed properties.
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Freddie Mac
How to Compare Investment Property Mortgage Offers
Don’t choose a mortgage based only on the advertised interest rate.
Compare:
Interest rate
APR
Points
Origination fees
Closing costs
Down payment
Required reserves
Prepayment penalties
Loan term
Fixed vs. adjustable rate
Monthly payment
Total borrowing cost
The CF recommends comparing multiple mortgage offers and specifically advises consumers to obtain at least three loan offers when shopping for a mortgage.
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Consumer Financial Protection Bureau
How to Get a Better Investment Property Mortgage Rate
Investors can potentially improve their financing options by:
Improving their credit profile
Increasing the down payment
Maintaining adequate cash reserves
Reducing existing debt
Comparing multiple lenders
Comparing APR rather than rate alone
Negotiating lender fees
Considering different loan terms
Building a strong rental-property financial history
Working with lenders experienced in investment properties
A lower rate isn’t always the cheapest loan. A mortgage with a lower advertised rate but significant points and fees may cost more overall.
Is an Investment Property Mortgage Worth It?
An investment-property mortgage can make sense when the property’s expected income and long-term appreciation potential justify the financing costs and risks.
Before purchasing, investors should calculate:
Rental Income − Operating Expenses − Debt Service = Estimated Cash Flow
Operating expenses may include property taxes, insurance, maintenance, management, utilities paid by the owner, vacancy costs, and other expenses.
Investors should also stress-test the property for higher expenses, vacancies, repairs, and changes in interest rates.
Frequently Asked Questions
What is the average investment property mortgage rate?
There is no single national investment-property mortgage rate that applies to every borrower. Rates depend on credit, down payment, property type, loan program, lender, loan amount, and other factors. Current investment-property rates can be higher than rates for primary residences.
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Bank rate
Can you get a 30-year mortgage on an investment property?
Yes. Eligible investment properties can qualify for 30-year financing through certain conventional and other loan programs, although availability and terms vary by lender.
What is the typical down payment for an investment property?
A down payment of 15% to 25% is common for conventional investment-property financing, although requirements vary and some programs may require more.
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Bank rate
Can you use rental income to qualify for an investment property mortgage?
Potentially. Lenders may consider rental income under specific underwriting rules. The amount that can be used depends on the loan program and documentation.
Are DSCR loans good for real estate investors?
DSCR loans can be useful for investors whose properties generate qualifying rental income. However, they can have higher borrowing costs than conventional financing, so investors should compare the total cost.
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NerdWallet
Can you refinance an investment property?
Yes. Depending on the lender and loan program, investors may be able to refinance an investment property to change the interest rate, term, or loan structure, or potentially access equity.
Final Thoughts
The best investment property mortgage depends on your credit profile, available cash, property type, rental income, investment strategy, and long-term goals.
For many investors, a conventional investment-property mortgage can be attractive when they have strong credit and stable finances. DSCR loans may provide another route for investors whose properties generate sufficient rental income. Portfolio and commercial loans can be useful for investors with more specialized properties or larger portfolios.
Before committing to a loan, compare multiple lenders, review the APR and total costs, understand reserve requirements, and calculate whether the property can remain profitable under realistic vacancy and expense assumptions.
Mortgage rates and loan requirements change frequently, so verify current terms directly with lenders before making a financial decision.
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